The Case Against Federal Child Care Subsidies

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Unleash Prosperity Hotline
Issue #1115
10/02/2024
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1) The Case Against Federal Child Care Subsidies
Both Tim Walz and J.D. Vance agreed in last night's debate that we need more federal support for child care programs. So naturally, they are both wrong.

Take two middle class couples with equal incomes and both parents working. Both mothers then have a child or two or more. In the first case, the mother (or the father) makes a financial sacrifice and quits her job and decides to take on the hard and often thankless work of being a stay-at-home mother. In the second case, both parents continue to work and put their kids in child care.

Under a federal child care program, the couple with now just one working parent pays taxes to support the family with two parents working. The family with two parents working gets a payment from the family with only one parent working.

How's that fair? EVERY study shows that families with dual incomes, have higher incomes than families with just one parent working.

We aren't making any value judgments about whether children are better off with a stay-at-home parent or being placed in child care. We are pro-choice on this issue, and we understand that in many instances both parents have to work to make ends meet. What we are saying is that government policy should be neutral in this decision.

The liberal Urban Institute has a new report that shows federal child care and early education spending totaled just under $40 billion in 2023, and has more than doubled in real terms since 2015:

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The best way to make everything from housing to child care more affordable is to create a booming economy with rising take-home pay. If we must subsidize child-rearing, the better solution is to scrap all childcare subsidies and have a means-tested child credit (as both candidates have proposed) that helps families with children whether they hire someone for child care or not.

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2) In Some States Power Costs Skyrocket by 800%
Well, it's happening just as we predicted. This headline tells the whole story of the latest auction for purchasing electric power from the grid in the southeast and several midwestern states:

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Allow us to be loud and clear on what is going on with our electric power generation. We are doing two REALLY stupid things at once. First, we are "deactivating" coal and even some gas and nuclear plants across. Second, we are shifting the load to unreliable "renewable" wind and solar power.

As we have long predicted, this will lead to a) higher power costs and b) periodic brownouts as demand overwhelms the power supply.

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3) Gone Girls

We reported a few months ago that women between the ages of 18-29 have surged to the left.

The latest Gallup report examines political trends of women in this age group from 2001-2007 versus 2017-24. Today, almost nine in 10 young women say they identify more with liberal than conservative positions on most issues. Yikes. See chart.

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Here at Unleash Prosperity, we focus on the economic and money issues. What is troubling is that 86% of young women believe in man-made global warming, 78% think environmental protection is more important than economic growth, and 80% say the government is doing too little to protect the environment. (We have the cleanest air and water in at least 100 years.)

Support for higher taxes on the rich, more regulation of business, and government-run health care has steadily increased for this female age-cohort.

We're not sure WHY this is happening, but it's deeply disturbing for those who support limited government and lower taxes. One thing that comes shining through, is that the longer women remain in higher education, the more liberal they become. Could it be that college makes young women (and men) stupider?

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4) Government Dependency Is Spreading Like a Virus

Just as in the debate between Trump and Kamala, last night's VP square-off had precious little conversation about runaway multi-trillion dollar government spending.

This chart shows that Americans are becoming addicted to government aid as we morph into a a nanny state. The Economic Innovation Group, cleverly titled its analysis "The Great Transfer-mation." The yellow areas are counties where government transfers exceed 25 percent of total personal income:

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The authors explain ([link removed]) :

Today, most U.S. counties depend on a level of government transfer income that was once reserved only for the most distressed places. In 1970, not even 1 percent of counties derived a quarter or more of their total personal income from transfers. In 2000, just 10.4 percent did. But by 2022, 53 percent of counties were receiving a quarter or more of their income from Transfers.

The study is a little misleading because it includes Social Security (which is a benefit) and we have an aging population.

Still, it is alarming how much money is being redistributed each year, and addressing this dependency culture should be a top priority of the next administration and Congress.

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5) Green Energy Subsidies Are a Gift to China

This Bloomberg chart shows the total Chinese dominance of the solar market in volume and cost.

There is some tragic irony that after decades of US dependency on foreign oil and gas, the fracking revolution made us the world's dominant producer. Now, the left insists we use government policies to make ourselves dependent on foreign solar panels.

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6) We Would Take Jimmy at 100 Over Joe at 81
Jimmy Carter was, alas, the worst president in modern times... but then along came Joe Biden.

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